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Secret Trusts Notes

GDL Law Notes > GDL Equity and Trusts Notes

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A more recent version of these Secret Trusts notes – written by Cambridge/Bpp/College Of Law students – is available here.

The following is a more accessble plain text extract of the PDF sample above, taken from our GDL Equity and Trusts Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Revision: Equity

[SECRET TRUSTS]
Intro

1. Normal requirements for testamentary trusts: must comply with s 9 Wills Act 1837

2. Reasons for using secret trusts: A will is a public document so privacy and also flexibility

3. Secret trusts - mechanism: either a) outright gift to the intended trustee in the will (fully secret) or gift in the will to the intended trustee stated to be 'on trust' (half secret)

4. Validity: Secret trusts appear to be exempt from statutory formalities

5. Standard of proof: onus is on the person claiming that a trust exists: standard is the normal civil standard (Re Snowden) Justification for enforcing secret trusts:

1. "Fraud theory" - we enforce them otherwise it would vs. the equitable theory that you cannot use statute for fraud - but unclear who this 'fraud' is being committed against. o

Hodge: thinks it's a fraud on both the testator and the secret beneficiary - but theory only really works with FTF (as with HSF it is clear there is a trust on the face of the will)

o

Discussed in Kasperbauer v Griffith

2. "Dehors the will theory" o

HSF: Blackwell and Blackwell - they happen outside the will - so we endorse themSo we circumvent the statutory formalities of s9 of the Wills Act

o

Secret trust operates by the declaration - not inside the will

o

Re Gardner (No. 2) beneficiary's share did not lapse upon death (dubious decision : see below)

o

Re Young: secret trust benefited the testator's chauffeur who had witnessed the will (see below)

Requirements

*

Requirements set out in Kasperbauer v Griffith (2000)

1.Intention

2.Communication to the intended trustee 1

Revision: Equity

[SECRET TRUSTS]

3.Acceptance of the trust by the trustee Must comply with the three certainties like any express trust Fully Secret Trusts

*

PS100,000 to Arthur - clandestine meeting with Arthur - to tell him that he is actually a trustee - Fully Secret Trust (FST) - looks like an outright gift to Arthur

*

If it fails then the fully secret trustee will take the legacy absolutely

Communication

1. Timing of communication

*

Must take place any time before death, whether before or after the signing of the will: Walgrave v Tebbs: the legatees had not been informed of the testator's wishes in lifetime so they took free from the trust

2. What must be communicated a) Existence of the trust o

Wallgrave v Tebbs: if a trust is to be enforced vs. an apparent absolute legatee then there must be communication of the fact of the trust

o

If the fact of the trust is communicated inter vivos, the legatee cannot take beneficially as his conscience is bound

b) Terms of the trust o

Terms as well as its existence must be communicated inter vivos

o

Re Boyes: terms of the trust were discovered after death in unattested documents - held to not having been properly communicatedCA held that there was a resulting trust to the testator's estate as original trust had not been properly communicated

c)The property subject to the trust 2

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